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IEB10-01_Borger+Pauwels.pdf (553.43 KB)

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Working paper

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2010

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cc-by-nc-nd, (c) Borger et al., 2010
Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116645

A Nash bargaining solution to models of tax and investment competition: tolls and investment in serial transport corridors

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Abstract

The purpose of this paper is to study toll and investment competition along a serial transport corridor competition allowing for partial cooperation between regional governments. Partial cooperation is modeled as a Nash bargaining problem with endogenous disagreement points. We show that the bargaining approach to partial cooperation implies lower tolls and higher quality and capacity investment than fully noncooperative behavior. Moreover, under bargaining, strategic behavior at the investment stage induces regions to offer lower quality and invest less in capacity as compared to full cooperation. Finally, Nash bargaining partially resolves the problem of welfare losses due to toll and capacity competition pointed out in the recent literature.

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Nash, John F., Jr., 1928-2015, Tarifes, Peatges, Impostos

Subject (English)

Rates, Tolls, Taxation

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IEB (Institut d’Economia de Barcelona) – Working Papers

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BORGER, Bruno de and PAUWELS, Wilfried. A Nash bargaining solution to models of tax and investment competition: tolls and investment in serial transport corridors. IEB Working Paper 2010/01. [consulted: 19 of August of 2026]. Available at: https://hdl.handle.net/2445/116645

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